HONG KONG, March 24 (Xinhua) -- The U.S. government's
plan to buy up banks' toxic assets is badly flawed, exposing American taxpayers
too much risk and may not work effectively, Nobel Prize-winning economist Joseph
Stiglitz said here on Tuesday.
"It's really a very bad program," he said.
U.S. Treasury said on Monday it would launch a plan
with 75 billion to 100 billion U.S. dollars from existing financial rescue funds
to rid banks of toxic assets, aiming for economic recovery.
The plan offered "perverse incentives", simply moving
bad assets away from the banks to the U.S. taxpayers, with hedge funds getting
to keep the upside risks and the American taxpayers getting the downside, the
2001 Nobel laureate said in the keynote discussion during a Credit Suisse Asian
Investment Conference in Hong Kong.
Stiglitz, a professor at Columbia University and a
former World Bank chief economist, then offered an option for American
government to "temporarily nationalize" those banks that are undercapitalized.
"They should be restructured and re-sold," Stiglitz
said, stressing that U.S. government should focus on the good banks and leave
the bad assets off to private investors, for the troubled banks have made bad
decisions and got their returns in earlier years.